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LIC share prices down 10% in 5 sessions. What's happening? Will it fall more?
LIC share price: Kotak Institutional Equities continued to remain positive on Life Insurance Corporation of India stock price.
LIC share price: Shares of Life Insurance Corporation of India (LIC) were down more than 2 per cent as it announced that it had received approval from the government for a wage revision following which salaries will be raised by around 17 per cent for its over 1.1 lakh employees. The hike will impact LIC's bottom line as it has an estimated annual implication of around ₹4,000 crore which would result in its annual wage bill balloon reaching more than ₹29,000 crore.
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What we know about LIC's wage hike?
It was reported that more than 1 lakh employees of LIC will see a 16 per cent increase in their base pay starting August 2022. When allowances are taken into account, the total wage hike could go up to 22 per cent, as per the report.
LIC share price today
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At 11.30am, the LIC shares were at ₹904.05 on the NSE, lower by 2.25 per cent. In the last session, the shares settled lower by 3.5 per cent. LIC share prices have fallen almost 10 per cent over the past five sessions.
Kotak on LIC share price
Domestic brokerage firm Kotak Institutional Equities continued to remain positive on Life Insurance Corporation of India stock seeing a strong upside of up to 44 per cent.
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It said, “We model employee expenses at 7-8 per cent of the net premium for LIC, while total employee expenses are almost 102-121 per cent of PAT. This compares with a 3-9 per cent ratio of employee expenses to the net premium for private players. Given its large base impact on overall EV may be low.”
"Provisions for wake hikes in the last four quarters dilute the one-time impact; reducing employee force augurs well to control the wage bill over time. In the meantime, business momentum seems to be holding on well, with the market value of equity investments up 5 per cent since December 2023," it adding giving a buy rating and fair value of 1,300.
